Preliminary Results

About this update from Bytes Technology Group Plc

[{"type":"text","content":"\n \n 23 May 2024 \n BYTES TECHNOLOGY GROUP plc \n  ('BTG', 'the Group') \n   \n Audited preliminary results for the year ended 29 February 2024 \n Strong strategic progress; extending track record of double-digit growth \n   \n Bytes Technology Group plc (LSE: BYIT, JSE: BYI), one of the UK's leading software, security, and cloud services specialists, today announces its financial results for the year ended 29 February 2024 (2023/24). \n   \n Sam Mudd, Chief Executive Officer, said: \n   \n \"I am very pleased to report another set of positive results for BTG, with a 12.2% increase in adjusted operating profit, driven by contributions from all areas of our business. Despite the challenging economic climate over the past year, our customers have continued to invest in their IT needs. Our gross invoiced income has grown by 26.7%, and our gross profit has risen by 12.5%, as we have expanded our client base in both the public and corporate sectors and increased our share of wallet among existing customers. \n   \n \"The Group has made strategic investments in personnel, internal systems, and new vendor accreditations to drive future growth and assist our customers in navigating the complexities of secure IT environments. Our strong relationship with Microsoft enables us to capitalise on exciting opportunities such as Copilot, Azure Virtual Solutions, and Business Apps. With continued demand for cloud adoption, backup, storage, and security solutions, these will be our key focus areas in 2024/25. \n   \n \"Moving forward, through our passionate, talented, and experienced staff, we are well-positioned to continue providing high-quality licensing advice, technical support, and service delivery to meet our customers' needs. This will remain our defining USP.\" \n   \n Financial performance \n   \n \n \n \n \n £'million \n \n \n Year ended 29 February 2024 \n \n \n Year ended 28 February 2023 \n \n \n % change year on year \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Gross invoiced income (GII) 1 \n   \n \n \n £1,823.0m \n \n \n £1,439.3m \n \n \n 26.7% \n \n \n \n \n Revenue 2 \n \n \n £207.0m \n \n \n £184.4m \n \n \n 12.3% \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Gross profit (GP) \n   \n Gross margin % (GP/Revenue) \n   \n GP/GII % \n   \n \n \n £145.8m \n   \n 70.4% \n   \n 8.0% \n \n \n £129.6m \n   \n 70.3% \n   \n 9.0% \n \n \n 12.5% \n \n \n \n \n Operating profit \n \n \n £56.7m \n \n \n £50.9m \n \n \n 11.4% \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Adjusted operating profit (AOP) 3 \n   \n AOP/GP % \n   \n Profit after tax \n   \n Cash \n \n \n £63.3m \n   \n 43.4% \n   \n £46.9m \n   \n £88.8m \n \n \n £56.4m \n   \n 43.5% \n   \n £40.4m \n   \n £73.0m \n \n \n 12.2% \n   \n   \n   \n 16.1% \n   \n 21.6% \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Cash conversion (current period) 4 \n \n \n 104.3% \n \n \n 84.3% \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Earnings per share (pence) \n \n \n 19.55 \n \n \n 16.88 \n \n \n 15.8% \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Final dividend per share (pence) \n   \n Special dividend per share (pence) \n \n \n 6.0 \n   \n 8.7 \n \n \n 5.1 \n   \n 7.5 \n \n \n 17.6% \n   \n 16.0% \n   \n \n \n \n \n Financial highlights \n -    GII increased 26.7% to £1,823.0 million (2022/23: £1,439.3 million). The exceptional level of growth was underpinned by strategically important contract wins in the public sector (most notably with the NHS and HMRC) and by continued demand from corporate customers.   \n -    Revenue increased 12.3% to £207.0 million (2022/23: £184.4 million).  \n -    Growth in GP of 12.5% to £145.8 million (2022/23: £129.6 million) supported by higher GP per customer of £24,400 (2022/23: £21,800).  \n -    Operating profit increased by 11.4% to £56.7 million (2022/23: £50.9 million). \n -    AOP increased by 12.2% to £63.3 million (2022/23: £56.4 million); AOP as a percentage of GP has remained in line with the previous year at 43.4% as we continue to invest in the business. \n -    Growth in profit after tax of 16.1% to £46.9 million (2022/23: £40.4 million), with high levels of interest income offsetting the impact of the rise in the corporation tax rate from April 2023. \n -    Earnings per share increased 15.8% to 19.55 pence (2022/23: 16.88 pence). \n -    Full-year cash conversion of 104.3% reflects strong cash collection from customers and in line with our annual target of 100%, an increase over the 84.3% achieved in 2022/23 and resulting in closing cash of £88.8 million (2022/23: £73.0 million). \n   \n Final and special dividend \n -    The Board proposes a final dividend of 6.0 pence per share and a special dividend of 8.7 pence per share. \n -    The final dividend represents a 17.6% increase over last year's payment, reflecting the strong growth in adjusted profit after tax, and takes the full-year dividend to 8.7 pence per share, an increase of 16.0%. \n -    The special dividend has been increased by 16.0%, therefore matching the increase in the full year dividend. \n   \n Operational highlights \n -    Customers that traded with BTG last year contributed 97% of our GP this year (2022/23: 96%), at a renewal rate of 109%. \n -    BTG committed to allocate Copilot licenses across 63% of internal staff (100% of sales and marketing teams) following the successful trials held in H2 2023/24. \n -    Increased headcount in the year by 13.7% to 1,057 (2022/23: 930) in order to meet high levels of customer demand; particular focus on bolstering sales and service delivery teams, including net new 72 sales heads. \n -    Continued expansion of our physical footprint with the opening of a London office in March 2023. \n -    Bytes Software Services awards in 2023 included Mimecast VAR Customer Excellence Partner of the Year, Forcepoint Partner Excellence Award, Rubrik Top Growth Partner of the Year, Checkpoint Cloud Partner of the Year, CyberArk Commercial Partner of the Year, and Tenable Growth Partner of the Year. \n -    Phoenix Software awards in 2023 included Microsoft Global Modern Endpoint Management Partner of the Year, VMware Winner of the Industry Award, Veeam Public Sector Partner of the Year, Druva International Partner of the Year, Sophos Public Sector Partner of the Year (EMEA North), and Adobe Best Retention Program Award. \n -    Both Bytes Software Services and Phoenix Software named among the UK's top 50 Best Workplaces 2024 in the Large Company category. This is in addition to both being listed by Great Places in the Tech, Women and Wellbeing categories for 2023. \n   \n Current trading and outlook \n   \n In 2023/24, we performed strongly, continuing our trend of double-digit growth across all key financial metrics. Whilst we operate in highly competitive markets amidst challenging macroeconomic conditions, by nurturing our customer relationships, extending our strong vendor partnerships, and leveraging the technical and commercial skills of our teams, we remain confident in our ability to succeed and make further progress in 2024/25. \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n   \n Analyst and investor presentation \n   \n A presentation for sell-side analysts and investors will be held today at 9:30am (BST) via a live video webcast that can be accessed using the link: \n   \n https://stream.brrmedia.co.uk/broadcast/66321bc93d21e42c1c32c267 \n   \n A recording of the webcast will be available after the event at www.bytesplc.com . The announcement and presentation will be available at www.bytesplc.com from 7.00am and 9.00am (BST), respectively. \n         \n Enquiries \n   \n \n \n \n \n Bytes Technology Group plc \n \n \n Tel: +44 (0)1372 418 500 \n \n \n \n \n Sam Mudd, Chief Executive Officer \n Andrew Holden, Chief Financial Officer \n \n \n   \n \n \n \n \n \n \n \n   \n \n \n \n \n Headland Consultancy Ltd \n \n \n Tel: +44 (0)20 3805 4822 \n \n \n \n \n Stephen Malthouse \n \n \n   \n \n \n \n \n Henry Wallers \n \n \n   \n \n \n \n \n Jack Gault \n \n \n   \n \n \n \n \n   \n Forward-looking statements \n   \n This announcement includes statements that are, or may be deemed to be, 'forward-looking statements'. By their nature, forward-looking statements involve risk and uncertainty since they relate to future events and circumstances. Actual results may, and often do, differ materially from forward-looking statements. \n   \n Any forward-looking statements in this announcement reflect the Group's view with respect to future events as at the date of this announcement. Save as required by law or by the Listing Rules of the UK Listing Authority, the Group undertakes no obligation to publicly revise any forward-looking statements in this announcement following any change in its expectations or to reflect events or circumstances after the date of this announcement.  \n   \n About Bytes Technology Group plc \n   \n BTG is one of the UK's leading providers of IT software offerings and solutions, with a focus on cloud, security, and AI products. The Group enables effective and cost-efficient technology sourcing, adoption and management across software services, including in the areas of security and the cloud. It aims to deliver the latest technology to a diverse range of customers across corporate and public sectors and has a long track record of delivering strong financial performance. \n   \n The Group has a primary listing on the Main Market of the London Stock Exchange and a secondary listing on the Johannesburg Stock Exchange. \n   \n 1 ' Gross invoiced income' (GII) is a non-International Financial Reporting Standard (IFRS) alternative performance measure that reflects gross income billed to customers adjusted for deferred and accrued revenue items. GII has a direct influence on our movements in working capital, reflects our risks and shows the performance of our sales teams. \n 2 'Revenue' is reported in accordance with IFRS 15 Revenue from Contracts with Customers. Under this standard, the Group is required to exercise judgement to determine whether the Group is acting as principal or agent in performing its contractual obligations. Revenue in respect of contracts for which the Group is determined to be acting as an agent is recognised on a 'net' basis (the gross profit achieved on the contract and not the gross income billed to the customer). Our key financial metrics of gross invoiced income, gross profit, adjusted operating profit and cash conversion are unaffected by this judgement. \n 3 'Adjusted operating profit' is a non-IFRS alternative performance measure that excludes from operating profit the effects of significant items of expenditure that do not reflect our underlying operations. Amortisation of acquired intangible assets and share-based payment charges are both excluded on this basis. The reconciliation of adjusted operating profit to operating profit is set out in the Chief Financial Officer's review below. \n 4 'Cash conversion' is a non-IFRS alternative performance measure that divides cash generated from operations less capital expenditure (together, 'free cash flow') by adjusted operating profit. \n _______________________________________________________________________________ \n   \n Chief Executive Officer's review \n   \n A strong performance delivering on our strategy \n   \n 2023/24 was another year of strong performance with the Group growing adjusted operating profit (AOP) by 12.2% and gross profit (GP) by 12.5%, driven by a 26.7% increase in gross invoiced income (GII). Our revenue, stated after the netting adjustment for software and external services sales, under IFRS 15, was up 12.3%. \n   \n Despite the ongoing economic uncertainty, we have continued to achieve double-digit growth year on year, underpinned by our diverse range of product offerings, including software, IT services, and hardware solutions from leading vendors and software publishers and reflecting the robust nature of IT spending across the UK and Ireland. \n   \n The scale of the increase in GII is in part due to our success in securing large public sector contracts, illustrating our credibility and strength in bidding for significant government software opportunities under the Crown Commercial Services framework agreement. While these sales are initially won at reduced margins, due to the competitive tendering process, we have a strategy and track record of growing the profitability of these contracts over time to secure additional opportunities within those accounts. Additionally, our GII has grown well across our corporate sector customers, increasing by 17.6%, reflecting our continued success in this area. \n   \n Our growth in 2023/24 continued to be driven by customers' demand for resilient and efficient IT environments around security, cloud adoption, digital transformation, hybrid data centers, and storage. These are areas where we will continue to invest in pre-sales and specialist technical skills to expand our opportunities with existing and new customers. Examples of our services delivery capabilities include our Security Operation Centre (SOC), Governance, Risk and Compliance (GRC), and Software Asset Management (SAM) including licensing spend optimisation supported by our own IP in the form of Quantum and Licence Dashboard. The expansion of our IT services capability is further enhanced by the renewal of our Microsoft Azure Expert status for the provision of managed services, along with many other key vendor accreditations. \n   \n Customer investments increasingly take the form of annuity contracts, providing confidence in our future growth prospects and the potential for up-selling and cross-selling opportunities with existing clients. Most recently this is seen in the strong customer response to Microsoft's AI products, as we have commenced sales of Copilot and associated in-house services to support customer readiness and adoption. We continue to expand our internal skills through AI-dedicated teams in preparation for this to gain increasing momentum in 2024/25 and beyond. Alongside this, other vendors also have a pipeline of AI-supported software solutions that we look forward to rolling out to our customers. \n   \n We are proud of the energy, enthusiasm and professionalism demonstrated by our people, now with over 1,000 staff who do a tremendous job supporting our customers and providing outstanding service levels. We continue to focus on targeted recruitment and training and attracting talent, in front-end sales, delivery teams and across all supporting areas, to help with our ambitious growth plans. A number of recently announced appointments demonstrate our desire to grow the careers of our staff internally, such as Phoenix Software's Managing Director appointment of Clare Metcalfe, and on attracting external talent, such as Bytes Software Services new Chief Commercial Officer, Hayley Mooney. \n   \n As a management team, we are extremely pleased with the way our people continue to embrace our collaborative, team-based culture. Our flexible working regime continues to deliver positive results for our business, while also meeting our people's aspirations for a healthy work/life balance. In June 2023, we launched our third Share Save Plan, which has again been well received by our employees, with over 50% participating in one or more of these plans. \n   \n To support the growth in sales and people, we continue to invest in, and evolve, our internal systems both to improve user experiences and to drive efficiencies. Notwithstanding this investment, our AOP as a percentage of GP has remained in line with the previous year at just over 43% and meeting our sustainable target of more than 40%. \n   \n We have continued to deepen our relationships with key partners and are especially pleased to have been recognised by leading industry vendors. Phoenix has been named 2023 Microsoft Modern Endpoint Management Global Partner of the Year, along with receiving awards from VMware, Sophos and Adobe, while Bytes received awards from Mimecast, Forcepoint and Rubrik, to name just a few, reflecting the status and high esteem that the Group has with global technology leaders, and is testament to the expertise of our staff and the customer success stories that we deliver. \n   \n We are committed to executing our strategy in a responsible manner, with sustainability rooted in everything we do. Our sustainability framework aims to deliver positive impacts for our stakeholders across the key themes we have identified as most relevant for the environment in which we operate. Within each theme - financial sustainability, corporate responsibility, stakeholder engagement and good governance - we set ourselves focus areas that drive our activities. Through our staff-led working groups, we allocate time and resources to various environmental initiatives and to corporate social responsibility activities. We remain committed to supporting diversity throughout our business and are proud of the balance represented across our people. We continue our efforts to align with broader diversity targets to reflect the society in which we, and our stakeholders, operate. More details in respect of our sustainability initiatives are set out below. \n   \n Our dividend policy is to distribute 40% of the Group's post-tax pre-exceptional earnings to shareholders by way of normal dividends. Accordingly, we are pleased to confirm that the Board has proposed a final dividend of 6.0 pence per share and an additional special dividend of 8.7 pence per share that, subject to shareholder approval, will both be paid on 2 August 2024 to shareholders on the register at 19 July 2024. \n   \n My appointment as CEO was confirmed in May 2024 following what had been a challenging couple of months for the Group. Throughout the period since Neil Murphy's resignation, I have been hugely impressed by the commitment and professionalism of all of our staff as they remained focused on delivering our strategic priorities as we have entered 2024/25. I am excited to have the opportunity to lead BTG on the next stage of its journey and I wish to extend my gratitude to all my colleagues for their hard work and dedication to the business. Finally, I would like to thank our clients for their support and entrusting their business to us; together, our staff and customers are our lifeblood and will always be our top priority. \n \n   \n \n   \n Continued focus on environment, social and governance (ESG) \n   \n Our approach to responsible business and ESG is aimed at helping to build a sustainable future and create long-term value for the Group and its stakeholders. Our strategy is underpinned by our purpose and values, which fosters an aligned culture across the organisation. During the period, we further progressed our ESG initiatives in the following ways. \n   \n Increasing our carbon reporting \n   \n In 2023/24, two major milestones were achieved: our calculation and baselining of Scope 3 emissions and the submission of our carbon reduction targets to the Science Based Targets initiative (SBTi). For the first time, we have calculated all our Scope 1 and 2 and relevant Scope 3 emissions, which has given us a broad view of our key sources of emissions. In July 2023, we made a Group commitment to submit our targets to the SBTi for validation against the Paris Agreement's aim for less than a 1.5-degree global temperature increase. These were submitted in December 2023, and we expect to have our targets validated during 2024. 2023/24 also saw enhanced disclosures through CDP, which was scored for the first time and is in line with our industry. \n   \n We continue to monitor the progress of the IFRS S1 and S2 standards being adopted by the UK Government and will review our Annual Report and Accounts following adoption. The standards will incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), so we expect to be in a good position to transition. Within our businesses, we are supporting the evolution to greener transport to reduce business travel and commuting emissions. The Group has successfully deployed an electric vehicle scheme during the period. \n   \n Making positive impacts on our society \n   \n Employee support and wellbeing continue as key focus areas for the Group, particularly in light of the continuing cost-of-living crisis, with wellbeing days an important part in driving a healthier and happier workforce. In addition to this, employees have been engaged in, and managers trained in, the impact of menopause and in neurodiversity as part of wider awareness programmes. \n   \n Our strong culture remains a driving force behind our successful growth. We continue to support this through staff events, incentive trips and the development of our people with continued learning and training opportunities. In 2023/24, there has been an expansion of the apprenticeship scheme into more areas of the business. Staff are also engaged with through various channels and improvements are made based on their ideas and initiatives. \n   \n During 2023/24, we supported our communities through donations, fundraising events and volunteer days, such as with the Wildlife Aid Foundation, the Rainbow Trust and St Leonard's Hospice. Charity sport days have continued over the summer months, engaging with vendors to widen the impact. In addition to fundraising and volunteering, due to an IT refresh, Bytes was also able to donate 140 laptops to employee-nominated non-profit organisations and charities across the UK. \n   \n Board composition and committee memberships \n   \n The below changes to the composition of the Board and committee memberships were made in 2023/24, a number of these changes followed the resignation of Neil Murphy. The appointments of Sam Mudd as CEO and Ross Paterson and Anna Vikström Persson followed a selection process led by the Chair and with support from a leading external search firm. The appointments bring a wealth of experience that complement and enhance the existing expertise within the Board. \n   \n Changes to the Boad and committee memberships made or announced during 2023/24: \n -    12 July 2023: David Maw retired as Non-Executive Director. \n -    12 July 2023: Sam Mudd appointed as an Executive Director at the Annual General Meeting while continuing in her role as Managing Director (MD) of Phoenix Software Limited, a wholly-owned subsidiary of the Group. \n -    12 July 2023: Erika Schraner assumed the role of Designated Non-Executive (DNED) for employee engagement, replacing David Maw. \n -    31 October 2023: Alison Vincent stepped down from the Board as an Independent Non-Executive Director. \n -    1 November 2023: Erika Schraner appointed Chair of the Remuneration Committee. \n -    1 February 2024: Shruthi Chindalur appointed as an Independent Non-Executive Director and member of the Audit, Nomination and Remuneration Committees. \n -    21 February 2024: Neil Murphy resigned as Chief Executive Director (CEO) and Executive Director. \n -    21 February 2024: Sam Mudd appointed as Interim CEO: \n   \n Further changes to the composition of the Board and committee memberships were made or announced following the period end: \n -    25 March 2024: Mike Phillips resigned as an Independent Non-Executive Director. \n -    25 March 2024: Erika Schraner appointed as Senior Independent Director and Interim Chair of the Audit Committee. \n -    25 March 2024: Shruthi Chindalur assumed the role of DNED for employee engagement. \n -    10 May 2024: Sam Mudd appointed as CEO. \n   \n -    Effective 1 June 2024: \n o  Ross Paterson appointed as an Independent Non-Executive Director, Chair of the Audit Committee, and member of the Nomination and Remuneration Committees. \n o  Anna Vikström Persson appointed as an Independent Non-Executive Director and member of the Audit, Nomination and Remuneration Committees. \n o  ESG Committee of the Board established, members will be Anna Vikström Persson (Chair), Patrick De Smedt, Erika Schraner, Ross Paterson and Shruthi Chindalur. \n \n   \n \n   \n   \n \n   \n Chief Financial Officer's review \n   \n \n \n \n \n \n \n \n Year ended 29 February 2024 \n   \n \n \n Year ended 28 February 2023 \n   \n \n \n Change \n   \n \n \n \n \n Income statement \n \n \n £'m \n   \n \n \n £'m \n   \n \n \n % \n   \n \n \n \n \n Gross invoiced income (GII) \n \n \n      1,823.0 \n \n \n       1,439.3 \n \n \n 26.7% \n \n \n \n \n GII split by product: \n \n \n \n \n \n \n \n \n \n \n \n \n \n   Software \n \n \n      1,722.0 \n \n \n       1,346.1 \n \n \n 27.9% \n \n \n \n \n   Hardware \n \n \n 41.4       \n \n \n         38.3 \n \n \n 8.1% \n \n \n \n \n   Services internal 1 \n \n \n 31.5 \n \n \n 28.5 \n \n \n 10.5% \n \n \n \n \n   Services external 2 \n \n \n        28.1 \n \n \n 26.4        \n \n \n 6.4% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Netting adjustment \n \n \n (1,616.0) \n \n \n (1,254.9) \n \n \n 28.8% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Revenue \n \n \n       207.0 \n \n \n      184.4 \n \n \n 12.3% \n \n \n \n \n Revenue split by product: \n \n \n \n \n \n \n \n \n \n \n \n \n \n   Software \n \n \n      130.4 \n \n \n       114.1 \n \n \n 14.3% \n \n \n \n \n   Hardware \n \n \n         41.4 \n \n \n         38.3 \n \n \n 8.1% \n \n \n \n \n   Services internal 1 \n \n \n 31.5 \n \n \n 28.5 \n \n \n 10.5% \n \n \n \n \n   Services external 2 \n \n \n         3.7 \n \n \n 3.5         \n \n \n 5.7% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Gross profit (GP) \n \n \n         145.8 \n \n \n         129.6 \n \n \n 12.5% \n \n \n \n \n   GP/GII % \n \n \n 8.0% \n \n \n 9.0% \n \n \n \n \n \n \n \n   Gross margin % \n \n \n 70.4% \n \n \n 70.3% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Administrative expenses \n \n \n 89.1 \n \n \n 78.7 \n \n \n 13.2% \n \n \n \n \n Administrative expenses split: \n \n \n \n \n \n \n \n \n \n \n \n \n \n   Employee costs \n \n \n 71.2 \n \n \n 63.3 \n \n \n 12.5% \n \n \n \n \n   Other administrative expenses \n \n \n 17.9 \n \n \n 15.4 \n \n \n 16.2% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Operating profit \n \n \n         56.7 \n \n \n        50.9 \n \n \n 11.4% \n \n \n \n \n Add back: \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n   Share-based payments \n \n \n 5.7 \n \n \n 4.2 \n \n \n 35.7% \n \n \n \n \n   Amortisation of acquired intangible assets \n \n \n 0.9 \n \n \n 1.3 \n \n \n (30.8)% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Adjusted operating profit (AOP) \n \n \n         63.3 \n \n \n         56.4 \n \n \n 12.2% \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n Interest income \n Finance costs \n Share of profit of associate 3 \n \n \n 5.1 \n (0.4) \n 0.2 \n \n \n - \n (0.5) \n - \n \n \n   \n   \n   \n \n \n \n \n Profit before tax \n \n \n 61.6        \n \n \n         50.4 \n \n \n 22.2% \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Income tax expense \n \n \n (14.7) \n \n \n (10.0) \n \n \n 47.0%  \n \n \n \n \n Effective tax rate \n \n \n 23.9% \n \n \n 19.9% \n \n \n \n \n \n \n \n Profit after tax \n \n \n         46.9 \n \n \n         40.4 \n \n \n 16.1% \n \n \n \n \n \n \n \n \n \n \n \n   \n 1 Provision of services to customers using the Group's own internal resources \n 2 Provision of services to customers using third-party contractors \n 3 Cloud Bridge Technologies 25.1% share of profits since April 2023 \n   \n Overview of 2023/24 results \n   \n 2023/24 has seen continued double-digit growth across all our key performance measures. Customers have continued to engage with us to support their move into the cloud, or to extend their presence in it, with demand for more sophisticated and resilient security, support and managed service solutions. \n This has resulted in operating profit increasing by 11.4% to £56.7 million (2022/23: £50.9 million) and AOP growing by 12.2% year on year from £56.4 million to £63.3 million. The adjusted operating profit excludes the impact of a mortisation of acquired intangible assets and share-based payment charges, which do not reflect the underlying day-to-day performance of the Group. \n Gross invoiced income (GII) \n   \n GII reflects gross income billed to our customers, with some small adjustments for deferred and accrued items (mainly relating to managed service contracts where the income is recognised over time). We believe that GII is the most useful measure to evaluate our sales performance, volume of transactions and rate of growth. GII has a direct influence on our movements in working capital, reflects our risks and demonstrates the performance of our sales teams. Therefore, it is the income measure that is most recognisable among our staff, and we believe most relevant to our customers, suppliers, investors and shareholders for them to understand our business. \n   \n GII has increased by 26.7% year on year, with growth spread across all the business's income streams, but most significantly for software, which remains the core focus, contributing 94% of the total GII for the year (2022/23: 94%). The Group's already substantial presence in the public sector has been bolstered by several very large strategic wins relating to government Microsoft Enterprise Agreements. The Group bids under highly competitive tenders, either for single contracts or for several public body contracts in aggregate, the latter enabling us to gain multiple new clients from a single bid process. \n   \n This continued high level of government investment in IT, and the Group's success in winning those new contracts, has resulted in our public sector GII increasing by £280.9 million, up 32.8%, to £1,137.5 million (2022/23: £856.6 million). Our corporate GII increased by £102.7 million to £685.5 million (2022/23: £582.7 million), representing a very pleasing rise of 17.6%. \n   \n This means that our overall GII mix has moved slightly compared to last year, with 62% in public sector (2022/23: 60%) against corporate of 38% (2022/23: 40%). \n   \n Revenue \n   \n Revenue is reported in accordance with IFRS 15 Revenue from Contracts with Customers. Under this reporting standard, we are required to exercise judgement to determine whether the Group is acting as principal or agent in performing its contractual obligations. Revenue in respect of contracts for which the Group is determined to be acting as an agent is recognised on a 'net' basis, that is, the gross profit achieved on the contract and not the gross income billed to the customer. \n   \n Our judgements around this area are set out in notes 1.4 and 1.10 of the full-year financial statements for 2023/24 but in summary, software and external services revenue is treated on an agency basis while hardware and internal services revenue is treated as principal. \n It should be noted that GII, gross profit, operating profit, and profit before and after taxes are not affected by these judgements, and neither are the consolidated statements of financial position, cash flows and changes in equity. \n With the significant increase in software GII, as noted above, and a squeeze on software margin as noted below, its treatment on a net, or agency, basis, means that the 12.3% increase in revenue in the year is therefore lower than the rise in GII. \n   \n Gross profit (GP) \n   \n Gross profit increased by 12.5% to £145.8 million (2022/23: £129.6 million). \n   \n This growth is less than that for GII given the high level of new or renewed GII derived from the public sector and the highly competitive nature of the tendering process, governed under the Crown Commercial Services framework agreements. This has meant that large software contracts, most notably with Microsoft, have been won or renewed at reduced margins. This tends to be particularly prevalent in the first year of new agreements with public sector entities and, as a result, we have seen a reduction on our GP/GII% in the year to 8.0% (2022/23: 9.0%). That said, if the impact of the two largest new contracts is removed from the calculation, the percentage rises to 8.9%, virtually in line with last year and demonstrating the continued strong performance of the business in maintaining its margins. \n   \n Deals such as these are consistent with the Group's strategy of winning new customers and then expanding share of wallet. Our objective is to ensure we build our profitability within each contract over its term, typically three to five years, by adding additional higher-margin products into the original agreement as the customers' requirements grow and become more advanced. Adding AI products such as Copilot will become part of these contract expansions going forward. This is further enhanced by focusing on selling our wide range of solutions offerings and higher-margin security products, while maximising our vendor incentives through achievement of technical certifications. We track these customers individually to ensure that the strategy delivers value for the business, and our other stakeholders, over the duration of the contracts. \n Our long-standing relationships with our customers and high levels of repeat business was again demonstrated in 2023/24 with 97% of our GP coming from customers that we also traded with last year (2022/23: 96%), at a renewal rate of 109% (which measures the GP from existing customers this period compared to total GP in the prior period). This demonstrates our ability to increase our share of wallet with average GP per customer growing from £21,800 in 2022/23 to £24,400 in 2023/24. \n   \n Administrative expenses \n   \n This includes employee costs and other administrative expenses as set out below. \n   \n Employee costs \n   \n Our success in growing GII and GP continues to be as a direct result of the investments we have made over the years in our front-line sales teams, vendor and technology specialists, service delivery staff and technical support personnel, backed up by our marketing, operations, and finance teams. It has been, and will remain, a carefully managed aspect of our business. \n   \n In addition to continuing to hire in line with growth and to ensure we have the expertise required to provide our clients with the best service, our commitment to develop, promote and expand from within the existing employee base, giving our people careers rather than just employment, is at the heart of our progress as a business. This has contributed to long tenure from our employees which in turn supports the long relationships we have established with our customers, vendors, and partners. This is at the very heart of our low employee churn rate, the growth in gross profit per customer and our high customer retention rate. \n   \n During the year we have seen total staff numbers rise above 1,000 for the first time, to 1,057 on our February 2024 payroll, up by 13.7% from the year-end position of 930 on 28 February 2023. Employee costs included in administrative expenses rose by 12.5% to £71.2 million (2022/23: £63.3 million), in line with our GP growth and reflecting the balanced and proportional way in which staff investments are made. Indeed, after excluding share-based payments of £5.7 million (2022/23: £4.2 million), the rise was lower at 10.8%. \n   \n Other administrative expenses \n   \n Other administrative expenses increased by 16.2% to £17.9 million (2022/23: £15.4 million). This increase included additional spend on internal systems, professional fees, staff welfare and travel costs. This reflects the costs of running, and investing in, a growing organisation and in operating a listed Group, including evolving our governance structure, controls, and processes with the support of our professional advisors. \n   \n Adjusted operating profit and operating profit \n   \n Adjusted operating profit excludes, from operating profit, the effects of: \n -    Share based payment charges because, while new employee share schemes are being launched, the charge to the income statement will increase each year. Accordingly, the charge for the current year has risen to £5.7 million, compared to £4.2 million last year. \n -    Amortisation of acquired intangibles because this cost only appears as a consolidation item and does not arise from ordinary operating activities. \n   \n We believe that adjusted operating profit is a meaningful measure that the Board can use to effectively evaluate our profitability, performance, and ongoing quality of earnings. Adjusted operating profit in 2023/24 increased to £63.3 million (2022/23: £56.4 million), representing growth of 12.2%. Our operating profit increased from £50.9 million to £56.7 million, equating to an increase of 11.4%. \n   \n Adjusted operating profit as a percentage of GP is one of the Group's key alternative performance indicators, being a measure of the Group's operational effectiveness in running day-to-day operations. We aim to sustain it in excess of 40% and have achieved this, with a ratio of 43.4% (2022/23: 43.5%). \n   \n Interest income and finance costs \n   \n This year has seen significant interest being earned from money market deposits, totalling £5.1 million (2022/23: nil). \n   \n Our finance costs largely comprise arrangement and commitment fees associated to our revolving credit facility (RCF), noting that to date the Group has not drawn down any amount. This balance also includes a small amount of finance lease interest on our right-of-use assets, including the introduction of a staff electric vehicle (EV) scheme. \n   \n Share of profit in associate \n   \n Following the acquisition of a 25.1% interest in Cloud Bridge Technologies in April 2023, in accordance with IAS 28 Investments in Associates we have accounted for the Group's share of its profits since the date of our investment, £0.2 million for the 11-month period. \n   \n Profit before tax \n   \n The combined impact of increased operating profits and high levels of interest received has seen our profit before tax increasing by an impressive 22.2% to £61.6 million (2022/23: £50.4 million). \n   \n Income tax expense \n   \n The £4.7 million (47.0%) rise in our income tax expense to £14.7 million (2022/23: £10.0 million) reflects the growth in profits described above and the increase in the UK corporate tax rate from 19% to 25% effective from 1 April 2023. \n   \n Nevertheless, our effective rate of tax at 23.9% is lower than the tax charge would be at the standard rate, primarily because of deductions available in relation to the share options exercised by staff during the year. The reconciliation is set out in note 8 to the financial statements. \n   \n Profit after tax \n   \n Profit after tax increased by 16.1% to £46.9 million (2022/23: £40.4 million), underlining our growth in operating profits and with the impact of higher taxes more than offset by the increase in interest income. \n   \n Earnings per share \n   \n As a result of this strong growth in profits attributable to owners of the company (post tax), our earnings per share have risen accordingly. Basic earnings per share are up 15.8% from 16.88 pence to 19.55 pence, while adjusted earnings per share have risen 15.7% to 21.78 pence (2022/23: 18.83 pence). The adjusted figure removes the effects of share-based payment charges and amortisation of intangible assets. \n   \n   \n \n   \n Balance sheet and cash flow \n \n \n \n \n \n \n \n As at \n \n \n \n \n   \n \n \n 29 February \n \n \n 28 February \n \n \n \n \n   \n \n \n 2024 \n \n \n 2023 \n \n \n \n \n Balance sheet \n \n \n £'m \n \n \n £'m \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Investment in associate \n Property plant and equipment \n \n \n 3.2 \n 8.5 \n \n \n - \n 8.4 \n \n \n \n \n Intangible assets \n \n \n 40.6 \n \n \n 41.5 \n \n \n \n \n Other non-current assets \n \n \n 4.9 \n \n \n 1.2 \n \n \n \n \n Non-current assets \n \n \n 57.2 \n \n \n                  51.1 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Trade and other receivables \n \n \n 221.8 \n \n \n 185.9 \n \n \n \n \n Cash \n \n \n 88.8 \n \n \n 73.0 \n \n \n \n \n Other current assets \n \n \n 11.8 \n \n \n 10.7 \n \n \n \n \n Current assets \n \n \n 322.4 \n \n \n               269.6 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Trade and other payables \n \n \n 277.9 \n \n \n 231.7 \n \n \n \n \n Lease liabilities \n \n \n 0.4 \n \n \n 0.1 \n \n \n \n \n Other current liabilities \n \n \n 19.6 \n \n \n 23.9 \n \n \n \n \n Current liabilities \n \n \n 297.9 \n \n \n                255.7 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Lease liabilities \n \n \n 1.3 \n \n \n 0.9 \n \n \n \n \n Other non-current liabilities \n \n \n 2.1 \n \n \n 2.6 \n \n \n \n \n Non-current liabilities \n \n \n 3.4 \n \n \n                    3.5 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Net assets \n \n \n 78.3 \n \n \n 61.5 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n Share capital \n \n \n 2.4 \n \n \n 2.4 \n \n \n \n \n Share premium \n \n \n 633.7 \n \n \n 633.6 \n \n \n \n \n Share-based payment reserve \n \n \n 11.0 \n \n \n 7.2 \n \n \n \n \n Merger reserve \n \n \n (644.4) \n \n \n (644.4) \n \n \n \n \n Retained earnings \n \n \n 75.6 \n \n \n 62.7 \n \n \n \n \n Total equity \n \n \n 78.3 \n \n \n 61.5 \n \n \n \n \n   \n Closing net assets stood at £78.3 million (2022/23: £61.5 million) including the Group's £3.2 million interest (25.1%) in Cloud Bridge Technologies (which includes our £0.2 million share of profits since it was acquired in April 2023). \n   \n Net current assets closed at £24.5 million (2022/23: £13.9 million). This includes growth in the trade and other receivables of 19.3%, and similar growth in trade and other payables of 19.9%, both reflecting the increase in our GII. \n   \n Our debtor days at the end of the year stood at 34, down from 37 at 28 February 2023, and our average debtor days for the year was also reduced to 37 (2022/23: 39). While we have increased our closing loss allowance provision to £2.5 million (2022/23: £1.5 million), this is a prudent position given the £35.0 million increase in our gross trade receivables and, in fact, we have come through the year with only £0.3 million in bad debt write-offs against total GII of £1.8 billion. \n   \n This strong performance in respect of collecting customer receivables has contributed to the positive cash conversion figures described below. \n   \n The Group has paid its suppliers on schedule through the year, with its average creditor days remaining in line with prior year at 47 and standing at 44 at the end of the year (2022/2023: 42). \n The consolidated cash flow is set out below along with the key flows which that affected it: \n   \n \n \n \n \n   \n \n \n \n \n \n Year ended 29 February 2024 \n \n \n Year ended 28 February 2023 \n \n \n \n \n   \n \n \n Cash flow \n \n \n £'m \n \n \n £'m \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n Cash generated from operations \n \n \n 67.3 \n \n \n 48.9 \n \n \n \n \n   \n \n \n Payments for fixed assets \n \n \n (1.3) \n \n \n (1.3) \n \n \n \n \n   \n \n \n Free cash flow \n \n \n 66.0 \n \n \n 47.6 \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n Net interest received/(paid) \n \n \n 4.7 \n \n \n (0.5) \n \n \n \n \n   \n \n \n Taxes paid \n \n \n (15.1) \n \n \n (10.3) \n \n \n \n \n   \n \n \n Lease payments \n \n \n (0.2) \n \n \n (0.2) \n \n \n \n \n   \n \n \n Dividends \n Investment in associate \n \n \n (36.6) \n (3.0) \n \n \n (30.7) \n 0.0 \n \n \n \n \n   \n \n \n Net increase in cash \n \n \n 15.8 \n \n \n 5.9 \n \n \n \n \n   \n \n \n Cash at the beginning of the year \n \n \n 73.0 \n \n \n 67.1 \n \n \n \n \n   \n \n \n Cash at the end of the year \n \n \n 88.8 \n \n \n 73.0 \n \n \n \n \n   \n \n \n   \n   \n \n \n \n \n \n \n \n \n \n \n   \n \n \n AOP \n   \n \n \n  63.3 \n   \n \n \n 56.4 \n   \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n   Cash conversion (annual) \n   \n \n \n  104.3% \n   \n \n \n 84.3% \n   \n \n \n \n \n   \n   Cash conversion (since IPO) \n \n \n 109.9% \n \n \n 112.4% \n \n \n \n \n \n \n \n \n \n \n   \n   \n   \n Cash at the end of the period was £88.8 million (2022/23: £73.0 million), which is after the payment of dividends totalling £36.6 million during the year - being the final and special dividends for 2022/23 and the interim dividend for 2023/24 - and after making the £3.0 million investment in Cloud Bridge. \n   \n Cash flow from operations after payments for fixed assets (free cash flow) generated a positive cash flow of £66.0 million (2022/23: 47.6 million). Consequently, t he Group's cash conversion ratio for the year (free cash flow divided by AOP) was 104.3% (2022/23: 84.3%). Our cumulative cash conversion since we first reported as a PLC in 2020/21 stands at 109.9% over the four years, which is ahead of our sustainable cash conversion target of 100% and reflects the Group's longer-term performance against this measure. \n If required, the Group has access to a committed revolving credit facility (RCF) of £30 million with HSBC. The facility commenced on 17 May 2023, replacing the Group's previous facility for the same amount and runs for three years, until 17 May 2026, with an optional one year extension to 17 May 2027. To date, the Group has not utilised the facility. \n   \n \n   \n Proposed dividends \n   \n As stated above, the Group's dividend policy is to distribute 40% of post-tax pre-exceptional earnings to shareholders. Accordingly, the Board is pleased to propose a gross final dividend of 6.0 pence per share. The aggregate amount of the proposed dividend expected to be paid out of retained earnings at 29 February 2024, but not recognised as a liability at the end of the financial year, is £14.4 million. In light of the company's continued strong performance and cash generation, the Board also considers it appropriate to propose a cash return to ordinary shareholders with a special dividend of 8.7 pence per share, equating to £20.9 million. If approved by shareholders, the final and special dividend will be payable on Friday, 2 August 2024 to all ordinary shareholders who are registered as such at the close of business on the record date of Friday, 19 July 2024. \n   \n The salient dates applicable to the dividend are as follows: \n   \n \n \n \n \n Dividend announcement date \n \n \n Thursday, 23 May 2024 \n \n \n \n \n Currency conversion determined and announced together with the South African (SA) tax treatment on SENS by 11.00 \n \n \n Monday, 15 July 2024 \n \n \n \n \n AGM at which dividend resolutions will be proposed \n \n \n Thursday, 11 July 2024 \n \n \n \n \n Last day to trade cum dividend (SA register) \n \n \n Tuesday, 16 July 2024 \n \n \n \n \n Commence trading ex-dividend (SA register) \n \n \n Wednesday, 17 July 2024 \n \n \n \n \n Last day to trade cum dividend (UK register) \n \n \n Wednesday, 17 July 2024 \n   \n \n \n \n \n Commence trading ex-dividend (UK register) \n \n \n Thursday, 18 July 2024 \n \n \n \n \n Record date \n \n \n Friday, 19 July 2024 \n \n \n \n \n Payment date \n \n \n Friday, 2 August 2024 \n \n \n \n \n   \n   \n Additional information required by the Johannesburg Stock Exchange: \n   \n 1.    The GBP:ZAR currency conversion will be determined and published on SENS on Monday, 15 July 2024. \n 2.    A dividend withholding tax of 20% will be applicable to all shareholders on the South African register unless a shareholder qualifies for exemption not to pay such dividend withholding tax. \n 3.    The dividend payment will be made from a foreign source (UK). \n 4.    At Thursday, 23 May 2024, being the declaration announcement date of the dividend, the company had a total of 240,361,243 shares in issue (with no treasury shares). \n 5.    No transfers of shareholdings to and from South Africa will be permitted between Monday, 15 July 2024 and Friday, 19 July 2024 (both dates inclusive). No dematerialisation or rematerialisation orders will be permitted between Wednesday, 17 July 2024 and Friday, 19 July 2024 (both dates inclusive). \n   \n Principal risks \n   \n The Group Board has overall responsibility for risk. This includes maintaining our risk management (ERM) framework and internal control systems and setting our risk appetite. In doing this, it receives support from our Audit Committee, our internal audit partner and our executive management teams. However, through their skills and diligence, everyone in the Group plays a part in protecting our business from risk and making the most of our opportunities. \n   \n We have identified principal risks and uncertainties that could have a significant impact on the Group's operations, which we assign to five categories: financial, strategic, process and systems, operational and regulatory. BTG's management reviews each principal risk looking at its level of severity, where it overlaps with other risks, the speed at which it is changing and its relevance to the Group. We consider the principal risks both individually and collectively, so that we can appreciate the interplay between them and understand the entire risk landscape.  \n   \n The unsettled geopolitical and macroeconomic environment persisted this year, affecting business and people around the world. Russia's war in Ukraine continued unabated, contributing to higher energy prices and inflation. As tensions rose across the Middle East after the 7 October attack on Israel, strikes on commercial ships in the Red Sea forced companies to pay higher insurance rates or a higher cost to reroute goods around southern Africa. Meanwhile, interest rates remained high. \n This all served as a strong reminder of the importance of having a robust, agile approach to managing risk. For us, risk management is a continuous journey, requiring review throughout the year. It starts with defining our risk appetite, which was unchanged this year, as we maintained our cautious approach. Our ERM framework enables us to identify and manage risk, and we believe that it continues to serve us well. The changes we made in 2022/23, by including risk management as a standing agenda item at each of the subsidiary board meetings, have solidified the Group's bottom-up approach to risk. \n   \n Through our ongoing risk monitoring process, we assess current and emerging risks. The evolving geopolitical and macroeconomic challenges this year increased the potential for economic disruption, especially as it affects our customers, which is one of our principal risks. While we remain vigilant, our business has performed strongly through various external crises in recent years, demonstrating its resilience. \n   \n Since our last Annual Report, we have added two new principal risks, reclassified an emerging risk as a principal risk and added one new emerging risk. We now have 14 rather than 11 principal risks, taking into account the following changes. \n   \n New principal risks: \n   \n ·      The Climate change and sustainability risk has risen from being an emerging risk to a principal risk called Sustainability/ESG. The physical threats from climate change will remain as emerging, but the elevated principal risk is about keeping up with regulatory requirement changes and ahead of expectations from investors, employees, customers and other stakeholders. \n ·      We have added a new principal risk called Supply chain management. The risk is based on the time and effort needed to manage the supply chain given increasing focus on compliance, audits, sustainability and reporting. \n ·      We have added another new principal risk called Regulatory and compliance, which relates to the inherent risks from evolving regulatory and compliance landscapes. \n   \n New emerging risk: \n ·      In October 2023 we identified a third emerging risk from AI and the impact this might have on our customers and their workforce due to the potential to change the internal IT and working landscape and to present risks from moral, legal and ethical standpoints. \n   \n Existing principal risks with updated focus: \n ·      Our Economic disruption and Inflation risks have been amended. Economic disruption now focuses on economic impacts affecting our customers, while Inflation now focuses on the internal effect on our workforce. \n ·      The Increasing debtor risk has expanded and been renamed Working capital. It now includes the financial risk of an increased aged debt profile, as well as creditors and the risk of vendors changing their payment terms. \n ·      We have expanded our definition of Competition to include the evolving competitor landscape, such as through AI and marketplaces. \n ·      The Relevance and emerging technology risk now incorporates the cost of staying current and includes the cost of additional resources as well as upgrading the technologies to use similar technologies. \n ·      We have expanded the Business continuity failure risk to include risk to and from people - like insider threats - and kept the risks from processes and technology. \n ·      Under the Attract and retain staff while keeping our culture risk, we have amended skills shortage from a widespread IT shortage to a shortage in emerging areas, such as AI, where expertise is in high demand. \n   \n Existing emerging risks: \n ·    As noted above, the physical risk from climate change remains unchanged as an emerging risk, as does our second emerging risk from 2022/23 around keeping pace with social change. \n   \n   \n   \n   \n \n \n \n \n Financial \n \n \n 1 Economic disruption \n   \n \n \n Risk owner CEO \n \n \n \n \n The risk \n This risk includes the impact of the crises in Palestine and the Red Sea and the continuing conflict in Ukraine. It encompasses the uncertainties caused by global economic pressures and geopolitical risk within the UK. \n   \n \n \n How we manage it \n We have so far continued to perform well during high inflation, the conflict in Ukraine and leaving the EU, as well as during the current cost-of-living crisis, disruption to shipping through the Red Sea and the Israel-Palestine conflict. \n   \n These real-life experiences of high inflation, rising cost of living, Covid-19, exchange rate fluctuations and leaving the EU have shown us to be resilient through tough economic conditions. The diversity of our client base has also helped us maintain and increase business in this period. We are not complacent, however - economic disruption remains a risk and we keep our operations under constant review. \n   \n Our continued focus on software asset management means that we advise customers of the most cost-effective ways to fulfil their software needs. Changes to economic conditions mean many organisations will look to IT to drive growth and/or efficiency. \n   \n Externally, we have seen more customers looking to avoid increased staff costs through outsourcing their IT to managed services. This may create an opportunity to accelerate our service offerings. \n   \n \n \n \n \n The impact \n Major economic disruption and potentially higher taxes could see reduced demand for software licensing, hardware and IT services, which could be compounded by government controls. Lower demand could also arise from reduced customer budgets, cautious spending patterns or clients 'making do' with existing IT. Increased costs from shipping diversions away from the Red Sea could have time and cost implications for imported goods. \n   \n Economic disruption could also affect the major financial markets, including currencies, interest rates and the cost of borrowing. The high inflation rates seen in 2022 and 2023 have decreased but are still above target rates. Economic deterioration like this could have an impact on our business performance and profitability. Inflationary pressure could still create an environment in which customers redirect their spending from new IT projects to more pressing needs. \n   \n \n \n \n \n 2 Margin pressure \n   \n \n \n Risk owner MDs of subsidiary businesses \n \n \n \n \n The risk \n BTG faces pressure on profit margins from myriad directions, including increased competition, changes in vendors' commercial behaviour, certain offerings being commoditised and changes in customer mix or preferences. \n   \n \n \n How we manage it \n Profit margins are affected by many factors at customer and micro levels. \n   \n We can control some of the factors that influence our margins but some, such as economic and political factors, are beyond our control. \n   \n In the past year we have [again] sought to increase margins where possible, while cost increases from vendors have grown our margins organically. Our diverse portfolio of offerings, with a mix of vendors, software and services, has enabled us to absorb any changes - and we continue to innovate to find new ways to deliver more value for our customers. Services delivered internally are consistently measured against our competition to ensure we remain competitive and maximise margins. \n   \n We aim to agree acceptable profit margins with customers upfront. \n   \n Keeping the correct level of certification by vendor, early deal registration and rebate management are three methods we use to make sure we are procuring at the lowest cost and maximising the incentives we earn. \n   \n This risk area is reviewed monthly. \n   \n \n \n \n \n The impact \n These changes could have an impact on our business performance and profitability. \n   \n \n \n \n \n 3 Changes to vendors' commercial model \n   \n \n \n Risk owner CEO \n \n \n \n \n The risk \n We receive incentive income from our vendor partners and their distributors. This partially offsets our costs of sales but could be significantly reduced or eliminated if the commercial models are changed significantly. \n   \n \n \n How we manage it \n We maintain a diverse portfolio of vendor products and services. Although we receive major sources of funding from specific vendor programmes, if one source declines, we can offset it by gaining new certifications in, and selling, other technologies where new funding is available. Where vendors have changed - such as Broadcom purchasing VMware - we have seen AWS and Dell increasingly embrace the reseller community. So, overall, for BTG the severity of this risk is unchanged. \n   \n We closely monitor incentive income and make sure staff are aligned to meet vendor partners' goals so that we don't lose out on these incentives. Close and regular communication with all our major vendor partners and distributors means we can manage this risk appropriately. In some areas we have seen a positive change in vendors' commercial terms, where we have been able to adapt practices. \n   \n The materiality of this risk has not been realised yet, but it remains a risk. \n   \n \n \n \n \n The impact \n These incentives are very valuable and contribute to our operational profits. Significant changes to the commercial models could put pressure on our profitability. \n   \n \n \n \n \n 4 Inflation \n   \n \n \n Risk owner CFO \n \n \n \n \n The risk \n Inflation in the UK, as measured by the Consumer Price Index (CPI), was 10.1% in March 2023 and more than halved to 3.2% by March 2024. This rate is above the Bank of England's target of 2%, although expectations suggest it could be 2% by the second half of 2024. \n   \n \n \n How we manage it \n Staff costs make up most of our overheads, so our attention has been focused on our staff and their ability to cope with the rising cost of living. \n   \n At the start of 2023/24, varying levels of wage increases were rolled out for our employees, with a greater percentage increase for lower-paid staff. This was to help our employees maintain their standard of living and be able to keep up with essentials such as rent and mortgage payments, and energy and food bills. \n   \n \n \n \n \n The impact \n Wage inflation and increased fuel and energy costs have a direct impact on our underlying cost base. \n   \n If our competitors increase wages to a higher level, then we potentially have a risk for retaining and attracting staff and customers. \n   \n \n \n \n \n 5 Working capital \n \n \n Risk owner CFO \n \n \n \n \n The risk \n As customers face the challenges of inflation and elevated interest rates in the current economic environment, there is a greater risk of an increasing aged debt profile, with customers slower to pay and the possibility of bad debts. \n   \n Vendors' changing payment terms could also have a significant impact. \n   \n In 2023/24 we have seen debtor days stabilise as inflation has reduced, but the number of days is yet to return to base level. \n   \n \n \n How we manage it \n Our credit collections teams are focused on collecting customer debts on time and maintaining our debtor days at targeted levels. Debt collection is reported and analysed continually and escalated to senior management as required. In the past financial year, BTG hasn't had any significant bad debt or write-offs. \n   \n A large part of a successful outcome is maintaining strong, open relationships with our customers, understanding their issues and ensuring our billing systems deliver accurate, clear and timely invoicing so that queries can be quickly resolved. \n   \n \n \n \n \n The impact \n This could adversely affect our businesses' profitability and/or cashflow. \n   \n   \n   \n \n \n \n \n Strategic \n \n \n 6 Vendor concentration \n   \n \n \n Risk owner CEO \n \n \n \n \n The risk \n Over reliance on any one technology or supplier could pose a potential risk, should that technology be superseded or exposed to economic down cycles, or if the vendor fails to innovate ahead of customer demands. \n   \n \n \n How we manage it \n We work with our vendors as partners - it is a relationship of mutual dependency because we are their route to the end customer. We maintain excellent relationships with all our vendors, and have a particularly good relationship with Microsoft, which relies on us as a key partner in the UK. Our growth plans, which involve developing business with all our vendors, will naturally reduce the risk of relying too heavily on any single one. \n   \n Hardware is not a core element of our business but is a steady sector, so we monitor supply closely. We also monitor the geopolitical situation continuously and work closely with suppliers to stay fully informed, so that we can respond quickly should the landscape change. With a diverse portfolio of suppliers and vendors, we are able to offer alternatives to customers if there is a particular vendor with a supply issue. Given this risk is largely driven by geopolitical and macroeconomic factors, we maintain a watching brief so that we can react swiftly if we need to. \n   \n \n \n \n \n The impact \n Relying too heavily on any one vendor could have an adverse effect on our financial performance, should that relationship break down. \n   \n Geopolitically, global shortages of computer hardware, components and chips could occur, which might limit our and our customers' ability to purchase hardware for internal use. This could lead to delays in customers purchasing software that is linked to, or dependent on, the hardware being available. Reduced access to computer chips could also slow down vendor innovation, leading to delays in creating new technology to resell to customers. \n   \n Uptake of AI is expected to increase rapidly. While this represents an opportunity, the development of AI by a handful of companies, including Microsoft, has the potential to further concentrate revenue and profit across fewer vendors. \n   \n This risk is also heightened by changes to shipping routes, if certain channels are made unsafe. \n   \n \n \n \n \n 7 Competition \n   \n \n \n Risk owner CEO \n \n \n \n \n The risk \n Competition in the UK IT market, or the commoditisation of IT products, may result in BTG being unable to win or maintain market share. \n   \n Mergers and acquisitions have consolidated our distribution network and absorbed specialist services companies. This has caused overlap with our own offerings. \n   \n A move to direct vendor resale to end customers (disintermediation) could place more pressure on the market opportunity. Platforms, like marketplaces, with direct sales to customers, could also be seen as disintermediation. \n   \n Frameworks, particularly in the public sector, are a procurement route of choice for some customers. We risk narrowing our route to customers if we are not part of these frameworks. \n   \n AI risks becoming a partial competitor, if it becomes able to provide accurate and beneficial licensing and infrastructure advice direct to customers. \n   \n \n \n How we manage it \n We closely watch commercial and technological developments in our markets. \n   \n The threat of disintermediation by vendors has always been present. We minimise this threat by continuing to increase the added value we bring to customers directly. This reduces clients' desire to deal directly with vendors. \n   \n Equally, vendors cannot engage with myriad organisations globally without the sort of well-established network of intermediaries that we have. \n   \n We currently work with AWS Marketplace and can sell to our vendors through its platform, which gives discounts to the customer versus buying directly. \n   \n Artificial intelligence/machine learning has been identified as a new emerging risk, and so will be explored and monitored for risks and opportunities to our business. \n   \n Currently, there is no sign of any commoditisation that would be a serious threat to our business model in the short or medium term. \n   \n \n \n \n \n The impact \n This risk could have a material adverse impact on our business and profitability, potentially needing a shift in business operations, including a strategic overhaul of the products, solutions and services that we offer to the market. \n   \n More consolidation could lead to less competition between vendors and cause prices to value-added resellers, like us, to rise and service levels to fall. Direct resale to customers could also increase. This could erode reseller margins, given the purchase cost is less for the distributor than the reseller. This could reduce our market, margin and profits. \n   \n \n \n \n \n 8 Relevance and emerging technology \n \n \n Risk owner CEO \n \n \n \n \n The risk \n As the technology and security markets evolve rapidly and become more complex, the risk exists that we might not keep pace and so fail to be considered for new opportunities by our customers. \n   \n \n \n How we manage it \n We stay relevant to our customers by: \n -    Continuing to offer them expert advice and innovative solutions \n -    Specialising in high-demand areas \n -    Holding superior levels of certification \n -    Maintaining our good reputation and helping clients find the right solutions in a complex, often confusing IT marketplace. \n   \n We defend our position by keeping abreast of new technologies and the innovators who develop them. We do this, for example, by running a cyber accelerator programme for new and emerging solution providers, joining industry forums and sitting on new technology committees. We have expanded the number and range of our subject-matter experts, who stay ahead of developments in their areas and communicate this internally and externally. \n   \n By identifying and developing bonds with emerging companies, we maintain good relationships with them as they grow and give our customers access to their technologies. This is core to our business, so the risk from this is relatively low. \n   \n \n \n \n \n The impact \n Customers have wide choice and endless opportunities to research options. If we do not offer cutting-edge products and relevant services, we could lose sales and customers, which would affect our profitability. \n   \n \n \n \n \n Processes and systems \n \n \n 9 Cyberthreats - direct and indirect \n   \n   \n \n \n Risk owner Chief Information Security Officer \n \n \n \n \n The risk \n Breaches in the security of electronic and other confidential information that BTG collects, processes, stores and transmits may give rise to significant liabilities and reputational damage. \n   \n \n \n How we manage it \n We use intelligence-driven analysis, including research by our internal digital forensics team, to protect ourselves. \n   \n This work provides insights into vulnerable areas and the effects of any breaches, which allow us to strengthen our security controls. \n   \n We have established controls that separate customer systems and mitigate cross-breaches. Our cyberthreat-level system also lets us tailor our approach and controls in line with any intelligence we receive. Our two subsidiaries share insights and examples of good practice on security controls with one another - and the security operations centre located at Phoenix's offices provides the whole business with up-to-date threat analysis. \n   \n   \n \n \n \n \n The impact \n If a hacker accessed our IT systems, they might infiltrate one or more of our customer areas. This could provide indirect access, or the intelligence required to compromise or access a customer environment. \n   \n This would increase the chance of first- and third-party risk liability, with the possible effects of regulatory breaches, loss of confidence in our business, reputational damage and potential financial penalties. \n   \n \n \n \n \n Operational \n \n \n 10 Business continuity failure \n   \n \n \n Risk owner CFO \n \n \n \n \n The risk \n Any failure or disruption of BTG's people, processes and IT infrastructure may negatively affect our ability to deliver to our customers, cause reputational damage and lose us market share. \n   \n \n \n How we manage it \n Our Chief Technology Officer and Head of IT manage and oversee our IT infrastructure, network, systems and business applications.  All our operational teams are focused on the latest vendor products and educate sales teams appropriately. \n   \n Regular IT audits have identified areas for improvement, while ongoing reviews make sure we have a high level of compliance and uptime. This means our systems are highly effective and fit for purpose. \n   \n For business continuity, we use different locations sites and solutions to limit the impact of service outage to customers. Where possible, we use active resilience solutions - designed to withstand or prevent loss of services in an unplanned event - rather than just disaster-recovery solutions and facilities, which restore normal operations after an incident. \n   \n Employees are encouraged to work from home or take time off when sick, to avoid transmitting illness within the workplace. We also have processes to make sure there isn't a single point of failure, and that resiliency is built into employees' skillsets. \n   \n Increased automation means a heavier reliance on technology. Although it can reduce human error, it can also potentially increase our reliance on other vendors. \n   \n Our efforts to reduce the risk from insider threats are multifaceted and involve pre-employment screening, contracts, training, identifying higher-risk individuals, and technology to reduce potential data loss. This risk is reviewed through frequent vulnerability assessments. \n   \n \n \n \n \n The impact \n Systems and IT infrastructure are key to our operational effectiveness. Failures or significant downtime could hinder our ability to serve customers, sell solutions or invoice. \n   \n Major outages in systems that provide customer services could limit clients' ability to extract crucial information from their systems or manage their software. \n   \n People are a huge part of our operational success, and processes rely on people as much as technology to deliver effectively to our customers. Insider threats, intentional or otherwise, could compromise our ability to deliver and damage our reputation. Employee illness and absence - if in significant numbers, such as a communicable disease in a particular team - could make effective delivery difficult. \n   \n \n \n \n \n 11 Attract and retain staff while keeping our culture \n   \n \n \n Risk owner CEO \n   \n \n \n \n \n The risk \n The success of BTG's business and growth strategy depends on our ability to attract, recruit and retain a talented employee base. Being able to offer competitive remuneration is an important part of this. \n   \n Three factors are affecting this: \n -    Inflation, which is still influencing salary expectations and wage growth \n -    Skills shortage in emerging, high-demand areas, such as artificial intelligence and machine learning \n -    With remote or hybrid working becoming the norm, potential employees in traditionally lower-paid geographical regions being able to work remotely in higher-paying areas like London. \n   \n Maintaining our BTG culture also affects how we attract and retain staff, which growth can change. \n   \n \n \n How we manage it \n We continually strive to be the best company to work for in our sector. \n   \n One of the ways we manage this risk is by growing our own talent pools. We've used this approach successfully in our graduate intakes for sales, for example. BTG also runs an extensive apprenticeship programme to create a new security skill set. We also review the time that management has to coach new staff. \n   \n Maintaining our culture is important to retaining current staff. We maintain our small-company feel through regular communications, clubs, charity events and social events. We aim to absorb growth while keeping our culture. \n   \n \n \n \n \n The impact \n Excessive wage inflation could either drive up costs or mean we are unable to attract or retain the talent pool we need to continue to deliver our planned growth. \n   \n   \n \n \n \n \n   \n \n \n 12 Supply chain management \n \n \n Risk owner CEO \n \n \n \n \n The risk \n Failure to understand suppliers may lead to regulatory, reputational and financial risks, if they expose our business to practices that we would not tolerate in our own operations. The time and effort to monitor and audit suppliers is considered a risk. \n   \n \n \n How we manage it \n Supplier set-up forms include questions to ask suppliers to disclose information relating to compliance and adherence to our Supplier Code of Conduct. Any unethical, illegal or corrupt behaviour that comes to light is escalated and appropriate actions is taken. \n   \n Phoenix has appointed a Procurement Manager and BSS has established a cross-disciplinary group to work on managing suppliers. \n   \n We consider the impact from shipping risks to be lower, given that only a small part of our profit and revenue come from hardware. \n   \n \n \n \n \n The impact \n Managing supply chains is important to the sustainability of the business from a legal, financial, reputational, ethical and environmental viewpoint. \n   \n There is a risk to our business if we engage with suppliers that: \n -    Provide unethical working conditions and pay \n -    Are involved in financial mismanagement and unethical behaviour \n -    Cause environmental damage \n -    Operate in sanctioned regions. \n   \n Escalating conflicts could also affect our supply chain - for example, rerouting shipping around South Africa adds journey time and increases carbon emissions. \n   \n \n \n \n \n Regulatory \n \n \n 13 Sustainability/ESG \n \n \n Risk owner CEO \n \n \n \n \n The risk \n The growing importance of sustainability and ESG for our customers, investors and employees means we need to stay at the forefront of reporting and disclosure, especially given that requirements and standards are continually updated. \n   \n \n \n How we manage it \n Our Board manages and monitors this risk closely, with oversight from the Audit Committee. \n   \n The Sustainability Manager continues to drive sustainability reporting and initiatives, and to work with an appointed third party to provide guidance and assurance on reported data. \n   \n Our Sustainability Steering Committee enables decision makers from across Group and our two operating companies to work towards a common goal and report on challenges. \n   \n Disclosures are made through several channels, including CDP. We submitted our carbon reduction targets to the SBTi in December 2023, as part of our programme to drive sustainability through best practice approaches. Feedback from disclosures is used to guide changes in the business. So, as disclosure methodologies stay current, so should the business, where possible and relevant. \n   \n   \n   \n \n \n \n \n The impact \n Falling behind expectations or our peers may lead to challenges around: \n -    Legal compliance, such as adhering to global standards \n -    Retaining customers, as they push to reduce emissions \n -    Investor relations, such as meeting criteria for ESG funds \n -    Attracting and retaining employees, as younger generations seek to work for more purpose-driven businesses. \n   \n \n \n \n \n   \n \n \n 14 Regulatory and compliance \n \n \n Risk owner CEO \n \n \n \n \n The risk \n Our business faces inherent risks from evolving regulatory and compliance landscapes. Changes in laws, regulations and industry standards could significantly affect our operations, financial stability and reputation. \n   \n \n \n How we manage it \n We engage external experts. BTG works closely with external authorities, including through internal and external audits and paid-for consultancy, to advise on expected changes to regulations and the company's response to them. \n   \n We monitor regulatory developments. Individuals with responsibilities in the business stay up to date with changes in their field through professional memberships and trade publications, and through directly following regulatory and compliance bodies. \n   \n We work to enhance internal controls. Compliance teams in each operating company hold a register of policies and organise reviews, updates and sign-offs with policy owners to make sure policies are kept current. \n   \n Our steering committees, operating company board meetings and BTG Board meetings are forums for raising and discussing changes that effect multiple areas of the business. \n   \n \n \n \n \n The impact \n Operational teams and process face administrative burdens and effects under rapidly changing regulations. \n   \n Failing to keep up with regulatory, reporting and compliance changes could lead to fines, legal challenges and reputational damage. \n   \n If regulatory compliance is not maintained, there are risks to the company and to individuals, which could lead to expensive legal challenges and reputational damage to the business among all stakeholders. \n   \n \n \n \n \n   \n   \n Going concern disclosure \n   \n The Group has performed a full going concern assessment for the year ended 29 February 2024. As outlined in the Chief Financial Officer's review above, trading during the year demonstrated the Group's strong performance in the period and our resilient operating model. The Group has a healthy liquidity position with £88.8 million of cash and cash equivalents available at 29 February 2024. The Group also has access to a committed revolving credit facility that covers the going concern period to 31 August 2025 and that remains undrawn. The directors have reviewed trading and liquidity forecasts for the Group, as well as continuing to monitor the effects of macroeconomic, geopolitical, and climate-related risks on the business. The directors have also considered a number of key dependencies, which are set out in the Group's principal risks report, and including BTG's exposure to inflation pressures, credit risk, liquidity risk, currency risk and foreign exchange risk. The Group continues to model its base case, severe but plausible and stressed scenarios, including mitigations, consistently with those disclosed in the annual financial statements for the year ended 28 February 2023, with the key assumptions summarised within the financial statements below. Under all scenarios assessed, the Group would remain cash positive throughout the whole of the going concern period without needing to utilise the revolving credit facility. \n   \n Going concern conclusion \n Based on the analysis described above, the Group has sufficient liquidity headroom through the forecast period. The directors therefore have reasonable expectation that the Group has the financial resources to enable it to continue in operational existence for the period up to 31 August 2025. Accordingly, the directors conclude it to be appropriate that the consolidated financial statements be prepared on a going concern basis. \n   \n Responsibility statement pursuant to the Financial Services Authority's Disclosure and Transparency Rule 4 (DTR 4) \n Each director of the company confirms that (solely for the purpose of DTR 4) to the best of his/her knowledge: \n   \n ·    The financial information in this document, prepared in accordance with the applicable UK law and applicable accounting standards, gives a true and fair view of the assets, liabilities, financial position and result of the Group taken as a whole. \n   \n ·    The Chief Executive Officer's and Chief Financial Officer's reviews include a fair review of the development and performance of the business and the position of the Group taken as a whole, together with a description of the principal risks and uncertainties that they face. \n   \n On behalf of the Board \n   \n   \n   \n   \n Sam Mudd                                 Andrew Holden                                          \n Chief Executive Officer                Chief Financial Officer \n   \n 23 May 2024 \n   \n Consolidated statement of profit or loss \n   \n   \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n Year ended 29 February 2024 \n \n \n Year ended 28 February 2023 \n \n \n \n \n   \n \n \n   \n \n \n Note \n \n \n   \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n Revenue \n \n \n \n \n \n 3 \n \n \n \n \n \n 207,021 \n \n \n 184,421 \n \n \n \n \n Cost of sales \n \n \n \n \n \n \n \n \n \n \n \n (61,243) \n \n \n (54,848) \n \n \n \n \n Gross profit \n \n \n   \n \n \n \n \n \n   \n \n \n 145,778 \n \n \n 129,573 \n \n \n \n \n Administrative expenses \n \n \n \n \n \n 4 \n \n \n \n \n \n (87,839) \n \n \n (77,753) \n \n \n \n \n Impairment on trade receivables \n \n \n \n \n \n 17 \n \n \n \n \n \n (1,227) \n \n \n (937) \n \n \n \n \n Operating profit \n \n \n   \n \n \n \n \n \n   \n \n \n 56,712 \n \n \n 50,883 \n \n \n \n \n Finance income \n \n \n \n \n \n 7 \n \n \n \n \n \n 5,111 \n \n \n -       \n \n \n \n \n Finance costs \n \n \n \n \n \n 7 \n \n \n \n \n \n (393) \n \n \n (491) \n \n \n \n \n Share of profit of associate \n \n \n \n \n \n 12 \n \n \n \n \n \n 166 \n \n \n -       \n \n \n \n \n Profit before taxation \n \n \n   \n \n \n \n \n \n   \n \n \n 61,596 \n \n \n 50,392 \n \n \n \n \n Income tax expense \n \n \n \n \n \n 8 \n \n \n \n \n \n (14,745) \n \n \n (9,971) \n \n \n \n \n Profit after taxation \n \n \n   \n \n \n \n \n \n   \n \n \n 46,851 \n \n \n 40,421 \n \n \n \n \n Profit for the period attributable to owners of the parent company \n \n \n   \n \n \n \n \n \n   \n \n \n 46,851 \n \n \n 40,421 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n Pence \n \n \n Pence \n \n \n \n \n Basic earnings per ordinary share \n \n \n \n \n \n 28 \n \n \n \n \n \n 19.55 \n \n \n 16.88 \n \n \n \n \n Diluted earnings per ordinary share \n \n \n \n \n \n 28 \n \n \n \n \n \n 18.85 \n \n \n 16.28 \n \n \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n The consolidated statement of profit or loss has been prepared on the basis that all operations are continuing operations. \n   \n There are no items to be recognised in other comprehensive income and hence, the Group has not presented a statement of other comprehensive income. \n   \n   \n \n   \n   \n Consolidated statement of financial position \n   \n   \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n As at \n 29 February \n \n \n As at \n 28 February \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n 2024 \n \n \n 2023 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n Note \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n Assets \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Non-current assets \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Property, plant and equipment \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n 9 \n \n \n 8,478 \n \n \n 8,380 \n \n \n \n \n Right-of-use assets \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 10 \n \n \n 1,411 \n \n \n 783 \n \n \n \n \n Intangible assets \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 11 \n \n \n 40,646 \n \n \n 41,526 \n \n \n \n \n Investment in associate \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n 12 \n \n \n 3,193 \n \n \n - \n \n \n \n \n Contract assets \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n 13 \n \n \n 2,689 \n \n \n 397 \n \n \n \n \n Deferred tax asset \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n 8 \n \n \n 834 \n \n \n - \n \n \n \n \n Total non-current assets \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n 57,251 \n \n \n 51,086 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Current assets \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Inventories \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 15 \n \n \n 60 \n \n \n 58 \n \n \n \n \n Contract assets \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n 13 \n \n \n 11,756 \n \n \n 10,684 \n \n \n \n \n Trade and other receivables \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 17 \n \n \n 221,815 \n \n \n 185,920 \n \n \n \n \n Cash and cash equivalents \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 18 \n \n \n 88,836 \n \n \n 73,019 \n \n \n \n \n Total current assets \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n 322,467 \n \n \n 269,681 \n \n \n \n \n Total assets \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n 379,718 \n \n \n 320,767 \n \n \n \n \n \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Liabilities \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Non-current liabilities \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Lease liabilities \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 10 \n \n \n (1,314) \n \n \n (917) \n \n \n \n \n Contract liabilities \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n 14 \n \n \n (2,137) \n \n \n (1,976) \n \n \n \n \n Deferred tax liabilities \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 8 \n \n \n -  \n \n \n (635) \n \n \n \n \n Total non-current liabilities \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n (3,451) \n \n \n (3,528) \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Current liabilities \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Trade and other payables \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 19 \n \n \n (277,917) \n \n \n (231,717) \n \n \n \n \n Contract liabilities \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n 14 \n \n \n (19,348) \n \n \n (23,914) \n \n \n \n \n Current tax liabilities \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (243) \n \n \n (36) \n \n \n \n \n Lease liabilities \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 10 \n \n \n (423) \n \n \n (75) \n \n \n \n \n Total current liabilities \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n (297,931) \n \n \n (255,742) \n \n \n \n \n Total liabilities \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n (301,382) \n \n \n (259,270) \n \n \n \n \n Net assets \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n 78,336 \n \n \n 61,497 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Equity \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n   \n \n \n \n \n \n \n \n Share capital \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 20 \n \n \n 2,404 \n \n \n 2,395 \n \n \n \n \n Share premium \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n 20 \n \n \n 633,650 \n \n \n 633,636 \n \n \n \n \n Share-based payment reserve \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 11,050 \n \n \n 7,235 \n \n \n \n \n Merger reserve \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n 21 \n \n \n (644,375) \n \n \n (644,375) \n \n \n \n \n Retained earnings \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n 75,607 \n \n \n 62,606 \n \n \n \n \n Total equity \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n 78,336 \n \n \n 61,497 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n   \n   \n The consolidated financial statements were authorised for issue by the Board on 22 May 2024. \n   \n   \n   \n \n   \n Consolidated statement of changes in equity \n   \n   \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n Attributable to owners of the company \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n   \n \n \n   \n \n \n Share capital \n \n \n Share premium \n \n \n Share-based payment reserve \n \n \n Merger reserve \n \n \n Retained earnings \n \n \n Total equity \n \n \n \n \n   \n \n \n Note \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n Balance at 1 March 2022 \n \n \n \n \n \n 2,395 \n \n \n 633,636 \n \n \n 3,072 \n \n \n (644,375) \n \n \n 52,839 \n \n \n 47,567 \n \n \n \n \n Total comprehensive income for the year \n \n \n   \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 40,421 \n \n \n 40,421 \n \n \n \n \n Dividends paid \n \n \n 26(b) \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (30,654) \n \n \n (30,654) \n \n \n \n \n Share-based payment transactions \n \n \n 27 \n \n \n - \n \n \n - \n \n \n 4,188 \n \n \n - \n \n \n - \n \n \n 4,188 \n \n \n \n \n Tax adjustments \n \n \n 8 \n \n \n - \n \n \n - \n \n \n (25) \n \n \n - \n \n \n - \n \n \n (25) \n \n \n \n \n Balance at 28 February 2023 \n \n \n \n \n \n 2,395 \n \n \n 633,636 \n \n \n 7,235 \n \n \n (644,375) \n \n \n 62,606 \n \n \n 61,497 \n \n \n \n \n Total comprehensive income for the year \n \n \n \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n 46,851 \n \n \n 46,851 \n \n \n \n \n Dividends paid \n \n \n 26(b) \n \n \n - \n \n \n - \n \n \n - \n \n \n - \n \n \n (36,641) \n \n \n (36,641) \n \n \n \n \n Shares issued during the year \n \n \n 20 \n \n \n 9 \n \n \n 14 \n \n \n - \n \n \n - \n \n \n - \n \n \n 23 \n \n \n \n \n Transfer to retained earnings \n \n \n 27 \n \n \n - \n \n \n - \n \n \n (2,791) \n \n \n - \n \n \n 2,791 \n \n \n - \n \n \n \n \n Share-based payment transactions \n \n \n 27 \n \n \n - \n \n \n - \n \n \n 5,708 \n \n \n - \n \n \n - \n \n \n 5,708 \n \n \n \n \n Tax adjustments \n \n \n 8 \n \n \n - \n \n \n - \n \n \n 898 \n \n \n - \n \n \n - \n \n \n 898 \n \n \n \n \n Balance at 29 February 2024 \n \n \n   \n \n \n 2,404 \n \n \n 633,650 \n \n \n 11,050 \n \n \n (644,375) \n \n \n 75,607 \n \n \n 78,336 \n \n \n \n \n   \n   \n \n   \n   \n   \n   \n Consolidated statement of cash flows \n   \n   \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n Year ended 29 February 2024 \n \n \n Year ended 28 February 2023 \n \n \n \n \n   \n \n \n Note \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n £'000 \n \n \n £'000 \n \n \n \n \n Cash flows from operating activities \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Cash generated from operations \n \n \n 22 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 67,333 \n \n \n 48,889 \n \n \n \n \n Interest received \n \n \n 7 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n 5,111 \n \n \n - \n \n \n \n \n Interest paid \n \n \n 7 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (330) \n \n \n (443) \n \n \n \n \n Income taxes paid \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (15,109) \n \n \n (10,295) \n \n \n \n \n Net cash inflow from operating activities \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n 57,005 \n \n \n 38,151 \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Cash flows from investing activities \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Payments for property, plant and equipment \n \n \n 9 \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (1,334) \n \n \n (1,363) \n \n \n \n \n Investment in associate \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n (3,027) \n \n \n - \n \n \n \n \n Net cash outflow from investing activities \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n (4,361) \n \n \n (1,363) \n \n \n \n \n   \n \n \n \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n   \n \n \n \n \n \n \n \n Cash flows from financing activities \n \n \n \n \n \n   \n \n \n   \n \n \n &...

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